Over the past six or seven weeks, I have begun to reassess my ASX share portfolio and stress-test it for the worst possible scenario when it comes to the ongoing conflict between Israel, the United States, and Iran. After all, I'm a 'hope for the best, prepare for the worst' kind of guy when it comes to these situations. And this latest Middle East conflict is throwing up some pretty nasty potential consequences.
After a comprehensive reevaluation of my portfolio, I have realised that a mistake I made years ago when building it is still haunting it. This mistake is one that I have decided to dedicate 2026 to correcting.
A personal note here, one of my weaknesses is a love of a good collection. I am a collector at heart, and have been my entire life. There are few things I can resist less than a full collection, whether it be a book series or a set of trading cards. Or stocks.
When I first began building my stock portfolio, I couldn't help but try to own shares of every high-quality company I could find. If an item was in the supermarket, or contributed even a few stitches to the fabric of popular culture, I had to own shares of the company that made it.
A few years ago, I realised that this strategy perhaps wasn't the most prudent one. That revelation came when auditing my portfolio revealed that I owned more than a hundred different positions, all rather small. That is a ludicrous amount that prohibited the kind of dedication that is necessary for stock market success.
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My 2026 ASX share portfolio goal
Over subsequent years, I sold down many of those positions that, while I thought were decent companies, I lacked a deep knowledge of. These ranged from Nike, PepsiCo, and Unilever, to Kraft Heinz, Adobe, and Hasbro.
Most of these names are high-quality companies whose products can be found all over the world. But I simply had too many of them to keep track of. My love of collecting had become a burden on my finances.
Today, my portfolio is simpler, more nimble and easier to keep an eye on. However, even though I have sold off many holdings over the past few years, it is still too large. Here at the Fool, we usually tell investors that they should aim for somewhere between 15 and 25 companies in a typical individual stock portfolio. Unfortunately, I still don't have my money where our mouths are, and I currently own a lot more than 25 positions. But it is far less than the triple-digit figure I had a few years ago, so progress is being made.
One of my goals over the rest of 2026 is to reduce this portfolio further. Boiling it down, as it were. One of the things I have learned over my years in the market is that the best way to harness the power of compounding is to find the rare companies that can consistently compound their own revenues and earnings over time and buy as many shares as one can. There are only a handful of companies in my portfolio that I have faith in this endeavour. I'll be spending this year adding to them, and perhaps selling down the rest. In investing, as with many things, often less is more.
